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Forex Stock Exchange Forum  » Forex and Stock Trading English Forum » Forex School » The Open and Close

The Open and Close

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1attention The Open and Close Sun Sep 13, 2015 2:05 pm

gandra

gandra
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FIGURE 8.2 This is a valid bearish kangaroo tail on the AUD/USD one-hour chart because the open and the close of the kangaroo tail are both in the bottom third of the candlestick.
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All kangaroo tails have an open and close near the extreme end of the candlestick. For bearish kangaroo tails (sell signals), the open and close of the candlestick should be in the bottom third of the candlestick (see Figure 8.2).

If the open or the close is not in the bottom third of the candle, it is not a kangaroo tail. There is a similar rule for bullish kangaroo tails:These buy signals must have the open and the close in the top third of the candlestick (see Figure 8.3). If the open or the close is not in the top third of the candle, it is not a kangaroo tail.

FIGURE 8.3 This is a valid bullish kangaroo tail on the EUR/GBP weekly chart because the open and the close of the kangaroo tail are both in the top third of the candlestick.
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The open and the close of the kangaroo tail should be near the extreme end of the candlestick. The kangaroo tail is a reversal signal, so when we see a long tail on a kangaroo tail, and the open and close of the kangaroo tail are at the extreme opposite end, we know that the market has moved too far. The kangaroo tail is a clue that the market has extended beyond a zone, perhaps a bit too far beyond the zone.

Most kangaroo tails will print after surprising news; for example, kangaroo tails printed in the forex market during the tsunami in Japan in 2011. Kangaroo tails also printed in the forex market during the global financial crisis in 2008. Kangaroo tails do not only print during extremely surprising news. However, they will often appear when the markets get very excited, and this is often due to some extremely unusual events in the world.

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